Gender Wealth Strategy

New Paradigms

In this first module of Gender Wealth Strategy©, you will learn about ten key findings from our research into the new business and investment strategy of Positive Impact. For each finding, we discuss its significance and relevance to the gender wealth gaps women experience around the world. This section provides background information central to the design of our inclusive and sustainable solution for helping women and HeForShe advocates close these gaps.

Why Positive Impact? 

The answer to this question starts with Mark Livingston’s experience as a pro bono evaluation judge in the Social Impact Exchange Business Plan Competition from 2010–2014. In this annual competition, social enterprises and nonprofits from across the United States prepared business plans for how they would use growth capital to scale their impact.

It was a great experience for Mark, but he was disappointed only 20% of the plans he reviewed met due diligence requirements. Despite the availability of standards from the Social Impact Exchange, only one in five organizations provided sufficient evidence of readiness to use growth capital to scale impact sustainably.

Mark was disappointed, but not surprised by these results. During his career as a Certified Management Consultant™, he experienced first-hand the challenges faced by clients in designing new strategies, raising capital, and transforming their organizations to become more competitive.

Also disappointed by eighteen months of early retirement, Mark decided in June 2014 to re-launch his consulting practice. His goal was to help purpose-driven business and social enterprises raise the growth capital needed to scale their positive impact and grow sustainably.

From June 2014 to December 2016, Mark sought to learn (and re-learn) as much as he could about positive impact and raising capital. He attended conferences and webinars, researched websites, and read articles, reports, and books. He also interviewed 100 entrepreneurs and investors about their experiences in raising capital, making sustainable investments, and building sustainable business or social enterprises.

He even participated in an entrepreneurial business accelerator program in late 2016. This experience resulted in Mark’s sharpening his focus on the pay, funding, and asset gaps women experience relative to men. It also resulted in creation of WIIN, the Women’s Impact Investing Network, and with cofounder Kem Ellis, the launch of “second careers” as social entrepreneurs, impact investors, and venture philanthropists.

Key Findings

Here are ten key findings from Mark’s research into the new business and investment strategy of Positive Impact:

The Global Impact Investing Network defines impact investments as “investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.”

Investing for impact represents a significant paradigm shift for Wall Street and other investment firms. For over 100 years, the mindset has been that only non-profit and philanthropic organizations were to be concerned with societal issues or problems. Business enterprises and financial markets were to be concerned only with maximizing profit and shareholder (or investor) wealth. Impact investors reject this X or Y logic and replace it with a new X and Y value proposition better suited for 21st-century challenges.

However, we need to be honest about who is driving this shift in mindset. It is not Wall Street and related firms. Instead, demand for impact investments is coming from socially responsible investors, many of them millennials. This generation of women and men are demanding investment options aligned with a deeper set of values than “profit is the only purpose of business” or “greed is good.”

Interest in and money committed to impact and sustainable investing has grown steadily in the last decade. Looking forward, the amount of capital for impact investment is expected to increase by a factor of 10X through 2030 (about 20–25% per year on average).

For women and HeForShe advocates seeking greater access to capital or investments, this projection should be good news. However, as will be revealed in Key Finding #5, there’s a sobering downside to this story.

To learn more about impact investment, go to the Global Impact Investing Network. Also, watch this short video titled “What is Impact Investing?” Note the comments about “lack of an investment pipeline” and “lack of connectors.”

Another paradigm shift occurred in the U.S. on May 16, 2016.

On this date, new crowdfund investment laws took effect. These laws (part of the 2012 Jumpstart Our Business Startups Act) allow business owners and entrepreneurs to raise capital on crowdfund investment platforms (or funding portals), but only if these platforms are approved and regulated by the Financial Industry Regulatory Authority (FINRA) and Securities and Exchange Commission (SEC).

Crowdfund investing is similar to donation-based and rewards-based crowdfunding. The difference is that securities offerings require approval by state or federal regulators before they are made available to the public. Also, there are requirements depending on securities type and amount, as well as restrictions on the amount of money accredited and unaccredited investors can invest (accredited investors are “high net worth individuals”).

Like impact investment, crowdfund investing is projected to grow 10X by 2030. Here’s the “so what.” Crowdfund investing will increase access to capital, investors, and investments. As a result, savvy woman business owners and entrepreneurs will be able to raise capital on their own terms instead of begging for money from banks, lenders, private investors, and investment firms predominately run by men.

Also, crowdfund investing will enable more women, especially unaccredited investors (95% of all investors), to find high-quality investment opportunities previously available only to the well-off or rich.

In the last decade, another paradigm shift has taken place with the emergence of the global B Corp movement. This movement aims to redefine success in business by building an inclusive economy benefiting stakeholders, not just shareholders and investors.

The nonprofit B Lab is spearheading growth of a community of Certified B Corporations. These are for-profit enterprises certified as meeting rigorous standards of social and environmental performance, accountability, and transparency.

Check out B Lab to learn more about the B Corp Declaration of Interdependence and review the current list of Certified B Corporations from around the world. The B Corp movement is relevant to woman business owners, entrepreneurs, investors and HeForShe advocates for these reasons:

  • At last count, 35 states plus the District of Columbia have passed laws permitting companies to use a benefit corporation legal structure focused on creating social and economic value.
  • 3,285 companies and enterprises in more than 50 countries have achieved B Corp Certification.
  • Global corporations (led by 60 billion-dollar Unilever) are partnering with B Lab to develop a set of certification standards for publicly traded companies on stock markets around the world.
  • Wall Street and related firms are using the B Impact Assessment to not only make investment decisions but to obtain ratings for their own investment funds using the Global Impact Investment Rating System, which uses the B Impact Assessment.

You can also learn about Washington’s Social Purpose Corporation by downloading this report from the Apex Law Group. A Social Purpose Corporation is similar to a Benefit Corporation but offers more flexibility and may provide an alternative legal structure if you are thinking of moving in this direction. We have utilized the services of the Apex Law Group at The Social Impact Foundation and recommend their team and services.

In 2017, the United States ranked #18 on the global Social Progress Index. The U.S. was one position behind Japan and one ahead of France. Denmark came in at #1 while Canada ranked #6. Social Progress Imperative, a non-profit organization, first introduced the Index in 2014. This short video titled “What is the Social Progress Index?” provides an overview.

The Social Progress Index measures the extent to which countries provide for the social and environmental needs of their citizens. It focuses on societal health versus economic health. The Index is a measurement framework focusing on three distinct, but related questions:

  1. Does a country provide for its people’s most essential needs?
  2. Are the building blocks in place for individuals and communities to enhance and sustain well-being?
  3. Is there an opportunity for all individuals to reach their full potential?

Watch a presentation about the index from Michael Green, Executive Director of Social Progress Imperative. Note goal #5 on the United Nation’s 2030 Sustainable Development Goals (gender equality).

Professors Michael Porter of Harvard and Scott Stern of MIT created the Social Progress Index in 2010. Dr. Porter, a well-respected professor and sustainable business consultant, also created the concept of Shared Value (business models addressing societal issues). Dr. Porter’s short video will help you understand “Why Business Can Be Good at Solving Social Problems.” Be sure to note comments about “scaling impact” and “creating self-sustaining solutions.”

To learn more about the negative impact of gender inequality around the world, visit Social Progress Imperative and download recent progress reports. You can also read a comprehensive 2015 report by the McKinsey Global Institute titled The Power of Parity: How Advancing Women’s Equality Can Add $12 Trillion to Global Growth.

This finding is significant because economic health, societal progress, and the gender wealth gaps are inextricably linked.

In May 2016, another paradigm shift took place. This time, it occurred while Mark was conducting research on the strategy of revenue sharing for a client seeking new business model ideas.

Mark landed on the website of Michael “Luni” Libes, a serial entrepreneur and impact investor leading Fledge, a “conscious company accelerator” in Seattle. Mark found a five-minute video on Luni’s website titled “A Different View on Impact Investing.” It was this video that revealed the first glimpse of an inclusive and sustainable solution for closing the gender funding and wealth gaps.

As you watch this video, note the question Luni asks about entrepreneurs seeking to keep their enterprises. Also note his other question: “What if there were no possible 10Xs?” These are important questions for woman business owners and entrepreneurs planning to raise growth capital. We’ll revisit these two questions in the next section of Gender Wealth Strategy.

After viewing this video, Mark wanted to learn more about investors who funded new ventures without using debt or equity. He subscribed to Luni’s Next Step series of books and began reading The Realities of Funding a Startup and Revenue-based Financing.

In these two books, Luni dives deeper into the equity investment model used by angel investors, venture capitalists, and investment fund managers in Silicon Valley and on Wall Street. He eviscerates the “myth of 10X” and reveals the real average annual return for a portfolio of ten equity investments at both start-up (2.3X in 10 or 8.7%) and growth stages (1.5X in 10 or 8.4% ).

Luni also discusses two other important outcomes: (1) just 5% of early-stage ventures in the U.S. receive equity investment each year and (2) 70% of these investments fail to return invested capital. After finishing The Realities of Funding a Startup and Revenue-based Financing, a question popped into Mark’s mind: how can impact investing deliver on its promise to solve social and economic problems if 7 out of 10 investments fail?

In this key finding, we ask you to focus on the third financing and investment option presented by Michael “Luni” Libes in his YouTube video, “A Different View on Impact Investing.” Re-watch the video, but this time stop at the three-minute mark.

Here, Luni refutes the widely held belief that debt and equity are the only options for financing growth. It is this third option of revenue-based finance we believe offers women and HeForShe advocates an inclusive and sustainable solution for closing the gender wealth gaps.

Revenue-based finance goes by several names, including revenue royalties, royalty financing, revenue-based growth capital, and revenue sharing loans. It’s also been called a “pay-as-you-grow” model. Regardless of the name, the approach is the same. Instead of buying or selling a share of equity, investors and entrepreneurs buy or sell a share of revenue.

In a revenue-based finance transaction, enterprises pay a fixed percentage of top-line revenue (but no more than 10%) for an investment of growth capital (e.g., $250K). In return, investors receive a fixed multiple (or “cap”) on their invested money over a time period (e.g., $750K if the cap is 3X). The time period is significant and we discuss this in the learning program titled 3X-in-10™ Webinar Series.

The primary benefit for enterprises is flexible repayment, which goes up or down as revenue increases or decreases (i.e., there is no fixed repayment obligation as with a conventional loan). Also, revenue-based investors do not receive equity or ownership shares. As a result, there is no need to conduct a valuation of the business or retain high-priced lawyers and accountants to quibble over 35–50+ pages of arcane legal terms and conditions.

As most revenue sharing promissory notes are just 5–8 pages in length, one of the significant expenses related to raising capital is reduced significantly for business owners and entrepreneurs. This cost has been one of the major barriers preventing women from raising the capital they need to start a new venture or expand an existing business or social enterprise.

The list of benefits for investors includes liquidity in the form of income (cash), a quicker return on invested capital (“time-to-1X”) and an exit not dependent on a possible acquisition by a hypothetical company sometime in the next ten or so years.

And, as Luni points out in the video, there is the potential of a 20%+ internal rate of return (or IRR). This is important, because as you’ll see in the next key finding, only a small percentage of private equity investors and investment fund managers consistently deliver this level of performance.

Revenue royalties and revenue-based finance is the preferred strategy used by Arthur Lipper and Arthur Fox. These two giants of the investment world, with almost 100 years of Wall Street experience between them, recommend and use this form of finance and investment. By the way, royalty financing is not a new concept. This alternative form of funding has been used for 50+ years in intellectual property licensing, franchising, and in industries like movies, publishing, oil, gas, and pharmaceuticals.

Unfortunately, revenue-based finance and investment is not included in business school curricula. Mark earned an MBA degree in the early 1980s, and royalties were never discussed. His curriculum focused heavily on corporate finance and the Wall Street point-of-view.

Thirty-five plus years later, this mindset is still evident. As an example, Mark participated in a three-day business simulation in late 2016 with twenty individuals from institutions of higher education across the U.S. All but three had PhD’s in business and marketing; none of these men and women were familiar with revenue-based finance or royalty agreements.

The equity investment portfolio return of 2.3X over 10 years that Luni revealed in his video works out to an average annual return of 8.7% on an Excel spreadsheet. By the way, this is not a “net return.” It does not include the annual 2% management fee and 20% take of the profit (if there is any) that general partners of investment funds impose on limited partners (you and I).

To corroborate Luni’s findings and extend them to impact investment, we examined the 2015 Impact Investing Benchmark Study from Cambridge Associates. As highlighted in this study, 67% of impact investment funds in their database were counted as private equity or venture capital funds, while 33% were counted as private real asset funds (precious metals, commodities, real estate, etc.).

The overall return of these funds from 1998–2010 was 6.9% per year (20% less than Luni’s analysis).

If you’re under the impression that angel investors, Silicon Valley venture capitalists, and Wall Street or Main Street investment fund managers “walk on water,” consider these results:

  • A ten-year study of 21,640 private equity investments published in 2014 found 65% had returned 0X–1X.
  • One study found just 15% of venture capital (VC) investors had beaten the S&P 500; another study found just 20 VC firms (3% of all companies in this industry) generated 95% of the industry’s profit.
  • The National Venture Capital Association and Cambridge Associates released a study in 2013 showing that venture capital funds returned an average of 7.4% per year over a ten year period compared to the 8.5% annual return of the S&P 500.
  • A 2012 study by the Kauffman Foundation found their 100 million-dollar VC portfolio had realized a return of only 1.3X over 20 years.
  • The Private Equity Program of CalPERS (the California Public Employees Retirement System) has returned 10.6% (net internal rate of return) since its inception in 1990. The overall net multiple since inception was 1.4X.

Without a doubt, 0X–1X investment results are painful. While researching the business and investment strategy of positive impact, Mark met one angel investor who confided personal losses of $1 million in equity investments and vowed never to do it again. We’ll meet this investor again in the next section on A Failed System.

After reviewing and cross-checking several research studies, Mark found that investors (across all public and private equity asset classes) can expect net returns in the range of 7–10% per year over the next decade. This projection of 7–10% is an important benchmark and “hurdle rate” we factored into the design of a new system of finance and investment for women and HeForShe advocates.

If you would like a crash course on the ups and downs of private equity investment as well as the gender wealth gaps, we recommend the following:

During his research into positive impact, Mark reviewed a considerable body of work on the topic of strategy management, sustainable growth, and business transformation. These were areas he concentrated on during the second half of his career.

The result? Organizations, regardless of age or size, find it difficult to execute (or implement) strategic priorities and deliver consistent and sustainable results. Consider just these four data points (among many):

  • “44% of strategic initiatives did not succeed in the last three years.” (Project Management Institute, 2013).
  • “60-80% of businesses fall short of the targets identified in their strategic plans.” (Kaplan and Norton, 2008).
  • “Only 8% of large companies were able to deliver sustained organic growth of 5% or more over a ten-year period.” (Bain and Company, 2012).
  • “While 80% of organizations believed they delivered a superior customer experience, just 8% of customers said they were delivering.” (Bain and Company, 2005).

Why is this important? The answer can be found in a “mantra” Mark used with client organizations during his first career: be careful what you ask for.

This mantra is a reminder to be ready for the requirements that come with pursuing and achieving any professional (or personal) goal. It had been Mark’s experience that very few business owners and entrepreneurs (women and men) understood the “total cost” of their decisions. His experience was verified in focus group meetings conducted with entrepreneurs and investors in 2016.

For example, when Mark asked young entrepreneurs if they could describe the expectations of angel and venture capital investors, none could respond. They had never been told that the expectation of a “10X exit in 5–7 years” required hyper-growth rates of 50%+ per year.

Think about the feasibility of 50%+ revenue growth every year for five to seven years. For most new ventures or established enterprises, this is not a realistic, achievable, or sustainable expectation. We’ll examine the negative impact of this hyper-growth expectation more completely in the next section of Gender Wealth Strategy©.

How many times have you made an important decision (e.g., buying a home, accepting a marriage proposal, taking a job or investing in some “hot opportunity”) without seeing the entire picture or asking a complete set of questions? Be honest–we’ve all been there.

According to, “due diligence is an investigation or audit of a potential investment to confirm all facts, such as reviewing all financial records, plus anything else deemed material. Due diligence refers to the care a reasonable person should take before entering into an agreement or a financial transaction with another party.”

In his research, Mark wanted to learn more about due diligence frameworks and build on his five years of experience as a pro bono evaluation judge conducting due diligence for the Social Impact Exchange Business Plan Competition.

As Mark soon learned, there was no shortage of advice on how to do due diligence. Despite the many sources and authors writing about the subject (mostly male venture capitalists and angel investors), Mark could not find a single framework that addressed key findings emerging from his research (e.g., 44% of initiatives not succeeding, 70% of equity investments “crashing and burning,” etc.).

None of the due diligence frameworks Mark reviewed offered any questions focusing on the management capabilities of founders or entrepreneurial teams to (1) manage organizational change, (2) lead business transformation, and (3) build high-performance work systems.

The significance of this finding was reinforced for Mark after a series of interviews with Jesse Jacoby, the Founder and Managing Principal of Emergent Consultants and a strategic transformation consultant.

In these interviews, Jesse shared his thirty years of experience working with medium-sized enterprises and large businesses, including Fortune 500 corporations. He confirmed the difficulty leaders and management teams face in navigating change and leading the transition of their businesses from one stage of growth to another.

You can learn more about Jesse’s approach to change management and organizational transformation at Emergent Consultants.

In this last key finding, we return full circle to impact investing by focusing on the use of endowment assets by the 86,726 private non-operating foundations in the U.S.

For 50+ years, foundations have operated in a binary world. They provided grant funding to nonprofit organizations and occasionally made program-related investments (PRIs) in for-profit or non-profit social enterprises. The other 95% of their endowment assets were invested in typical Wall Street portfolios to maximize financial returns. For better or worse, this has been the world of “endowment management.”

Fast forward to April 2016, when the U.S. Treasury clarified use of Mission-Related Investment (MRI) by foundations. As a result, more foundation investment committees are becoming impact investors.

The potential for women and HeForShe business owners and entrepreneurs is enormous, as explained in this short Ford Foundation video.

In April 2017, the Ford Foundation announced their decision to allocate $1 billion (8% of their $12 billion endowment) to MRIs and impact investments over a ten-year period. You can read more about the Ford Foundation’s rationale for their decision in these two articles:

There are two noteworthy comments in these articles. The first one is from Peter Nadosy, chairman of the Ford Foundation’s investment committee and a Wall Street insider, who made this observation: “Not to malign Wall Street, but when they smell a profit opportunity, you have to be careful.” The second one is from Darren Walker, President of the Ford Foundation, who wrote: “We’ve spent the past 50 years trying to maximize the impact of 5% of our assets, but what about the other 95%?”

The other 95% Mr. Walker refers to is the $800 billion in U.S. foundation assets allocated to traditional Wall Street portfolios instead of investments that generate social, economic and environmental impact. This key finding is significant for woman business owners and entrepreneurs because philanthropic and community foundations represent a large source of growth capital in the years ahead. 

In conclusion, what are the key findings telling you?

To help you process the research findings presented in this section of Gender Wealth Strategy©, we’d like to introduce you to a tool called Force Field Analysis. It will help you to think about and reflect on the ten key findings. This tool is easy to use:

  1. On a blank sheet of paper, identify and write down the top 3–5 activating forces (or factors) you think are creating or driving the paradigm shifts identified in this section. For example, one factor could be “the demand from Millennials for investments matching their values.”
  2. Then, identify and write down the top 3–5 restraining forces (or factors) you think are working against or hindering these shifts. For example, one factor could be “widely-held beliefs about debt and equity.”

There are no right or wrong answers. It is your analysis of the information presented in each of the key findings. Here’s a graphical representation of the two force field question:

After completing this exercise, continue on to A Failed System, the next learning module of Gender Wealth Strategy©.

Published by Mark Livingston

Mark Livingston is President of The Social Impact Foundation and creator/author of the WIIN Learning Platform. He is also a Certified Pickleball Coach and Teaching Professional at Coach Mark LLC (

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